Hewlett Packard Enterprise (HPE Quick QuoteHPE - Free Report) shares have gained 25.9% in the past three months, outperforming the Zacks Computer - Integrated Systems industry’s appreciation of 2.2%. The Zacks Computer and Technology sector has witnessed no change in the same time frame.

HPE 3-Month Performance Chart

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Despite the appreciation in the share price, HPE trades at a discount. From a valuation standpoint, HPE trades at a forward price-to-sales ratio of 1.5, below the industry’s 4.81.

HPE Forward 12-Month (P/S) Valuation Chart

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Given these factors, the question arises: Should investors accumulate HPE stock or book profits and exit the investment?

HPE Grows on the Back of AI and Cloud Demand

Hewlett Packard Enterprise is benefiting from a broadening shift toward AI infrastructure, networking modernization and hybrid cloud. HPE is aligning its compute, storage and networking portfolios with enterprise inferencing, agentic AI and data-intensive workloads. HPE’s strategy spans AI systems, traditional servers, storage, Private Cloud AI and GreenLake, allowing it to participate across multiple stages of enterprise AI deployments.

In the third quarter of fiscal 2026, Cloud & AI revenues increased 25% year over year to $9 billion, with operating margin expanding to 17%. Server revenues rose 35%, while traditional server orders jumped 75%, driven by demand for AI-ready configurations and higher-value systems. Management said enterprises are moving from AI pilots toward production deployments, particularly for agentic AI and inferencing workloads, while HPE’s pipeline remains multiples of its backlog.

AI systems demand is also strengthening. HPE booked $2.4 billion of AI Systems orders in the fiscal third quarter, while AI Systems backlog increased 14% sequentially to $6.8 billion. Total AI backlog, including Networks for AI, reached a record $7.6 billion exiting the quarter. After quarter-end, HPE was awarded a $3.5 billion inferencing deal from a hyperscaler, providing further evidence that AI deployments are moving beyond experimentation toward production-scale workloads.

HPE’s Private Cloud AI offering is gaining traction as enterprises seek to run AI workloads closer to their data while maintaining control over governance, security and operations. Private Cloud AI orders grew at a triple-digit rate year over year. Meanwhile, GreenLake customers increased 18% year over year to 52,000, as customers expanded their consumption of software and intelligent cloud services. This strengthens HPE’s exposure to recurring, consumption-based revenues and increases software and services attachment across its infrastructure portfolio.

The Juniper Networks acquisition is further strengthening HPE’s AI infrastructure proposition by expanding its networking capabilities. The combination of strong AI demand, networking growth and pricing discipline is also improving profitability. HPE reported a record 40.4% non-GAAP gross margin in the fiscal third quarter, up from 29.9% a year earlier, while non-GAAP operating profit increased 155% to $2 billion.

HPE has consequently raised its fiscal 2026 earnings growth outlook. For fiscal 2027, management expects non-GAAP earnings-per-share of $3.75-$3.85. The Zacks Consensus Estimate for fiscal 2026 earnings suggests year-over-year growth of 98.4%. Estimates have been revised upward in the past seven days.

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HPE Expands Its Multi-Vendor Compute Ecosystem

Hewlett Packard Enterprise is strengthening its position in the enterprise compute market through partnerships with multiple leading semiconductor companies, including Advanced Micro Devices (AMD Quick QuoteAMD - Free Report) and Intel (INTC Quick QuoteINTC - Free Report) . HPE offers a broad portfolio of ProLiant Compute servers powered by AMD EPYC processors, spanning virtualization, edge computing, data-intensive workloads and AI applications. Its latest Gen12 systems include AMD EPYC 9005 processors with up to 192 cores, enabling customers to achieve higher compute density and efficiency.

At the same time, HPE maintains a deep relationship with Intel. HPE expanded its locally manufactured portfolio with the launch of ProLiant Compute DL360 and DL380 Gen12 servers powered by Intel Xeon 6 processors. Manufactured at HPE’s Riyadh facility, the systems are designed to support Saudi Arabia’s digital sovereignty and Vision 2030 objectives while addressing demanding workloads across AI, analytics, virtualization and hybrid cloud.

HPE and NVIDIA (NVDA Quick QuoteNVDA - Free Report) are expanding their collaboration to simplify enterprise AI deployment through integrated hardware, software and cloud management. HPE AI Factory with NVIDIA combines HPE compute, storage, networking and GreenLake with NVIDIA GPUs, CPUs, networking and AI Enterprise software. The companies also jointly developed HPE Private Cloud AI for secure on-premises and hybrid AI workloads.

HPE further supports NVIDIA Blackwell and Rubin architectures, Spectrum-X, InfiniBand, DPUs and AI-agent software across its AI infrastructure portfolio. Relationships with Intel, NVIDIA and Advanced Micro Devices demonstrate HPE’s strategy of supporting multiple processor ecosystems and a strong AI roadmap.

Conclusion: Buy HPE Stock Now

HPE’s strong exposure to the rapidly expanding AI infrastructure market, growing traction in traditional servers and a strengthening networking portfolio make a compelling case for investors to accumulate the stock. Deep partnerships with NVIDIA, Intel and Advanced Micro Devices further support the case. Given these factors, we suggest that investors should accumulate this Zacks Rank #1 (Strong Buy) stock. You can see the complete list of today’s Zacks #1 Rank stocks here.